5 Key Groups in Efficient Business Ecosystems

Business ecosystems essentially consist of five groups: suppliers, customers, employees, alliances, and the business environment overall (which includes academics, government agencies, and competitors). When companies seek to increase the efficiency of their ecosystem they typically are not focusing on the entire ecosystem, but parts of it. That is smart because while all components of the ecosystem do affect the others, they cannot necessarily be stimulated at the same time nor necessarily in the same way.

And make no mistake. Increasing the efficiency of the ecosystem is about stimulating it to grow and produce for the benefit of your organization.

One of the best discussions on ecosystems is found in a blog post by Simon Wardley, researcher at London-based Leading Edge Forum, a global advisory and consulting firm. In that post, Wardley elegantly explains ecosystems and several ways to manipulate them to your advantage.

This excerpt is particularly demonstrative of tactics used to stimulate ecosystem growth and activity, in this case in regards to the ILC model:

“In essence the supplier encourages others to innovate (take the high risk gamble associated with chaotic activities), leverages the ecosystem to spot diffusion of successful changes and then commoditizes rapidly to component services. The cycle of Innovation – Leverage – Commoditise (ILC) is then repeated for subsequent higher order systems,” writes Wardley.

The important thing to remember is that your ecosystem is fluid, i.e. in a state of constant change. Therefore, it is not enough to simply encourage others to join your ecosystem and then leave them to their own devices. In a fluid state and without your active and proactive participation, the ecosystem can evolve and leave your organization in its wake.

Constant awareness of changes in the groups within your ecosystem, on the other hand, will enable you to see both opportunities and challenges as they arise. Take this example from Wardley’s post:

“What is important to understand is the rate of evolution is not uniform between the business ecosystem and the public consumer ecosystem. Hence as the competition around email shifted to the public consumer market (with the introduction of services such as Yahoo and Google Mail) then the public consumer market developed highly commoditized email services. In many cases these were vastly more commoditized and efficient than the equivalent activity in the business ecosystem, which was often provided by products.

 Pressure mounted for those business consumers of email to adapt (and in many cases adopt) these more ‘consumerized’ services available to the members of the public.

This shift of competition and hence evolution from being governed by B2B, where companies represent both the suppliers and consumers of the activity, to one governed by competition in the public consumer space is known as ‘Consumerization’ (as described by Doug Neal, LEF in 2001).”

But awareness of changes in your ecosystem is not enough either. To prosper, you need to actively work at putting it to use.

“’Ecosystem’ conveys the idea that all the pieces of an economy come together in  places, and that their strength and interactions determine prosperity and economic growth,” said Rosabeth Moss Kanter, Arbuckle professor of business administration, in Harvard Business School’s general management unit, and chair and director of the Harvard University Advanced Leadership Initiative in an interview in Harvard Magazine. “In Silicon Valley there is a sense that you prosper only because you’re surrounded by lots of resources that make it possible to succeed, beyond what your own entity controls. Think of it as your garden, where you need fertile soil, seeds, and other ingredients to make things grow.”

So how do you “tend the garden” to make it grow?

In regards to the vendor/suppliers group, you need to do three things: engage, engage, engage. Keep the conversation going and help your suppliers zero in on the information they need to strengthen their usefulness to your organization but also to strengthen their own path to prosperity. Remember always that reward must go both ways; to do otherwise is to “eat the ecosystem.”

Read the excellent blog post “Growing Channels Business By Stimulating The Business Partner Ecosystems Economies”  by Henrik von Scheel, author of SAP Best-Seller Applying Real-World BPM in an SAP Environment, for more details on how to stimulate this group.

In regards to the customer/consumer group, you need to do several things. Wardley describes appropriate action to include:

“The consumer ecosystem can provide information on improvement, quality control,    reliability and price sensitivity. This is normally achieved through secondary sources i.e. not directly derived from interaction with the product itself but instead surveys, warranty cards, sales volume, customer services and it can even extend to co-creation of the product.

The ecosystem can also be influenced through marketing, branding and association of the product with other values (e.g. buying this kettle will make you look cool, save a rainforest etc).”

In regards to employees and alliances groups, foster collaboration and ease of input, i.e. make it easy for these groups to contribute ideas and information.

But in the end remember that you are part of the ecosystem and not the owner therefore it is essential that your organization give as well as it takes. That is easier said than done, the balance hard to attain and occasionally difficult to justify. Wardley explains the complexity of the situation in this example in his post:

“Let us suppose that one of these new higher orders systems (e.g. “big data” systems built with hadoop) started to diffuse. Through consumption of the component infrastructure service you could detect this diffusion in close to real time and hence rapidly decide to commoditize any new activity to your own component service e.g. in this case by introducing something like Amazon Elastic Map Reduce.

Naturally, you’d be accused of eating the ecosystem if you did this repeatedly but at the same time your new component services would help grow the ecosystem and create new higher order services.”

Tend your ecosystem well and faithfully for your very prosperity depends upon it.

pam bakerPam Baker is the author of eight books and hundreds of technology articles published daily in leading online and print publications. She is a member of the National Press Club (NPC) and the Internet Press Guild (IPG). You can reach her or follow her on Twitter and on Google+.

Tags: Business,BYOD,Productivity
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